The relationship between intellectual capital and financial performance: An application on small and medium-sized businesses

In today's knowledge economy, the importance of intellectual capital and its components (human capital, structural capital, and relational capital) on the financial performance of SMEs is increasing. SMEs with limited physical and financial resources must focus more on intellectual resources, such as knowledge, skills, innovation capacity, and organizational capabilities, to achieve a competitive advantage. The data set for the study's variables, which aimed to determine the effect of intellectual capital investments on the financial performance of enterprises in the Borsa Istanbul - SME (Small and Medium-Sized Enterprises) Index, covers the period from 2012 to 2023 and consists of annual observations. In the first model, Return on Assets Ratio (ROA) is used as the dependent variable, Structural Capital Efficiency (SCE), Human Capital Efficiency (HCE), Capital Employed Efficiency (CEE) are used as independent variables, and Leverage Ratio (LOR) and Market Capitalization (MC) are used as control variables. In the second model of the study, Market Value (PD) was used as the dependent variable, Structural Capital Efficiency (SCE), Human Capital Efficiency (HCE), Capital Employed Efficiency (CEE) as independent variables, and Leverage Ratio (LR) and Return on Assets Ratio (ROA) as control variables. As a result of the study, which employed the static panel data analysis method, a statistically significant positive relationship was found between the return on assets ratio variable and firms' market capitalization and capital employed efficiency variables. Conversely, a statistically significant negative relationship was found between human capital efficiency and the leverage ratio. There is a statistically significant positive relationship between the market capitalization variable and the return on assets and structural capital efficiency variables, and a statistically significant negative relationship between the utilized capital efficiency variable.